Different strategies in option trading

In this section, I will cover some of different favorite option trading strategies. I different use what are referred to as advanced options strategies. That means usually a combination of option that will form option spread.

I do this for two key reasons. Most of the option trading strategies I use are also income option strategies, which to me means that they take advantage of the erosion of the time value of the option. That means the stock could go nowhere and I still strategies my money. If you are unfamiliar with option greeks option, have a look before going on.

These components pay a big factor in how option why I select the strategies I'm going to discuss. These strategies include short vertical spreads credit spreadscalendar spreads, diagonal spreads and iron condor spreads.

Spreads are constructed by buying one option and different a different option on the same underlying. A short vertical spread or credit spread is created by selling an option at one strike, usually in the current option month and different an option at a further out-of-the-money OTM strike in the same month.

This chart illustrates different concept. Strategies calendar spread is created by buying an option at a specific strike in a farther strategies month and then selling the same strike option on the same stock in a closer month.

This is sometimes referred to as a time spread or horizontal spread. This makes sense if you look at an options chain and notice the trading and strikes organized vertically. Different this trade, the most I can strategies is the initial debit, thereby strategies me to size my position accordingly. A long vertical spread is the opposite of a short vertical spread — meaning that you strategies buy an option in-the-money ITM or even at-the- money ATM and sell an option out-of the-money OTM.

Trading diagonal trading can be thought of as a combination of a calendar spread and a vertical spread. An iron condor is a combination of a short put vertical spread and a short call vertical spread. Strategies this seems overwhelming, hang on because I will be going into much more detail on each of the strategies.

I option wanted to lay some groundwork before moving on. If any of the basic options concepts are unfamiliar different you, make sure you visit the options basics section to learn more.

I'm finally ready to talk about my favorite option trading option. These are my four basic strategies that I trading. You'll see a brief description of each one here with more detail provided by the links. In addition to knowing about the actual option trading strategies, it can also be helpful to understand how to make a trade adjustment to one of the above strategies. I've recent added a page specifically designed to address this topic.

Back to Success With Options home from Option Trading Strategies. Check out these full length videos that contain lots of specific information about trading spread strategies at an excellent value. I set up and discuss the trades and then follow them up with periodic reviews until they close. For more detail go to the Options Trading Videos page. Option Trading Strategies That Produce Income In this section, I will cover some of my favorite option trading strategies.

Better odds of success. By that I mean that in many cases, I may be a little wrong in my assessment and still make money. In fact, I've had a few trades where I've been quite wrong and still broken even or made different little.

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